Sadlier & Sadlier
[2015] FamCAFC 130
•1 July 2015
FAMILY COURT OF AUSTRALIA
| SADLIER & SADLIER | [2015] FamCAFC 130 |
| FAMILY LAW – APPEAL – Leave to appeal – Interim Spousal Maintenance – where there is an error of principle – where the husband has suffered a substantial injustice – where appeal is not from a decision categorised as orders in the nature of practice or procedure – leave granted. FAMILY LAW – APPEAL – whether the application was urgent or interim – whether s 77 of the Family Law Act 1975 (Cth) applied – whether the wife had an immediate need – whether this need was quantified – where there were errors in the wife’s Financial Statement – where the maintenance was determined according to the husband’s capacity to pay rather than the wife’s need – where the husband had ongoing legal obligation to service debt – where the order was not expressed for a limited time until further hearing – appeal allowed. |
Family Law Act 1975 (Cth) ss 72, 74, 75(2), 77, 94AA(1) , 94AAA(3)
Federal Proceedings (Costs) Act 1981 (Cth) ss 6, 9
Family Law Regulations 1985 (Cth) reg 15A
Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170
Ashton & Ashton (1982) FLC 91-285
Bevan & Bevan (1995) FLC 92-600
Branchflower & Branchflower (1980) FLC 90-857
Chapman & Chapman (1979) FLC 90-671
Commonwealth v Verwayen (1991) 170 CLR 394
Jess and Ors & Jess and Ors (2014) FLC 93-620
Kajewski & Kajewski (1978) FLC 90-471
Malcolm & Malcolm (1977) FLC 90-220
Page & Page (1987) FLC 91-806
Rutherford & Rutherford (1991) FLC 92-255
Samsung Electronics Co Ltd v Apple Inc (2011) 217 FCR 238
Samsung Electronics Co Limited v Apple Inc [2013] FCAFC 138
Stein & Stein (2000) FLC 93-004
| APPELLANT: | Mr Sadlier |
| RESPONDENT: | Ms Sadlier |
| FILE NUMBER: | NA | 75 | of | 2014 |
| APPEAL NUMBER: | BRC | 8988 | of | 2014 |
| DATE DELIVERED: | 1 July 2015 |
| PLACE DELIVERED: | Brisbane |
| PLACE HEARD: | Brisbane |
| JUDGMENT OF: | May J |
| HEARING DATE: | 30 June 2015 |
| LOWER COURT JURISDICTION: | Federal Circuit Court of Australia |
| LOWER COURT JUDGMENT DATE: | 2 December 2014 |
| LOWER COURT MNC: | [2014] FCCA 3064 |
REPRESENTATION
| SOLICITOR FOR THE APPELLANT: | In person |
| SOLICITOR FOR THE RESPONDENT: | In person |
Orders
Leave to appeal is granted.
The appeal from Order 1 of the orders made on 2 December 2014 be allowed and that order be discharged.
The application of the wife for spousal maintenance be remitted for rehearing in the Federal Circuit Court of Australia, before a judge other than Judge Demack.
There be no order as to costs of the appeal.
The Court grants to the husband a costs certificate pursuant to the provisions of s 9 of the Federal Proceedings (Costs) Act 1981 (Cth) being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise payment under that Act to the husband in respect of the costs incurred by him in relation to the appeal.
The Court grants to the wife a costs certificate pursuant to the provisions of s 6 of the Federal Proceedings (Costs) Act 1981 (Cth) being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the wife in respect of the costs incurred by her in relation to the appeal.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Sadlier & Sadlier has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| IN THE APPELLATE JURISDICTION OF THE FAMILY COURT OF AUSTRALIA AT BRISBANE |
Appeal Number: NA 75 of 2014
File Number: BRC 8988 of 2014
| Mr Sadlier |
Appellant
And
| Ms Sadlier |
Respondent
REASONS FOR JUDGMENT
By an Amended Notice of Appeal filed 20 February 2015, Mr Sadlier (“the husband”) appeals against one order made by Judge Demack of the Federal Circuit Court of Australia on 2 December 2014.
Judge Demack made an order, expressed to be until further order, that the husband pay a sum of $500 per week commencing as and from 5 December 2014, to Ms Sadlier (“the wife”). The relevant order the subject of this appeal is as follows:
1.That commencing Friday 5, December 2014 the husband pay the wife five hundred dollars ($500) by way of interim spousal maintenance by the close of business each and every Friday, and with such amount to be paid into a bank account as nominated by the wife.
The parties’ applications, which included a number of property related issues, proceeded by way of an interim hearing on 1 December 2014. The application of the wife filed 3 October 2014 sought that the husband pay $1,500 per week “by way of urgent spousal maintenance”.
At the outset of the hearing, the lawyers for the parties agreed the matter should be heard based on the material filed without cross-examination. In the reasons, Judge Demack describes the initiating application filed by the wife as “an application for urgent spousal maintenance” (at [1]) although the order made by her was not so described.
The primary judge made orders providing for the sale of a property described as “Property A”, the distribution of the proceeds from that sale to discharge certain registered mortgages, disclosure to be made by the wife to the husband, a court expert to be appointed to value the husband’s interest in several businesses and trusts and for the parties to attend mediation. The matter was then adjourned to March 2015.
The Amended Notice of Appeal contains eight grounds of appeal. It is appropriate to set them out in full as they reveal the argument of the husband:
1.That the learned Judge erred in law by finding that the [wife]’s income as expressed at item 9 and item 2(A) of the Financial Statement of the [wife] were a mistake in circumstances where:
a.The [wife] had not provided any documentary discovery of her financial circumstances to the [husband] since 22 May 2014,
b.Failed to make any findings about the effect of that non-disclosure on the case of the [husband] and the [wife] (in circumstances where she disregarded the [wife]’s sworn evidence and determined that the expenses deposed to by the [wife] were a mistake),
c.Made the findings that the income was not properly expressed in the [wife]’s Financial Statement in the circumstances where there was no sworn evidence to that effect before the learned Judge either in the form of sworn Affidavit material or oral evidence,
d.Made the finding where the sworn evidence of the Respondent was that her weekly income from salary or wages was $993.00 per week.
2.Further to Ground 1, the learned Judge failed to apply the doctrine of estoppel to the issue of the [wife]’s income and failed to consider that doctrine where the [husband] relied upon the sworn evidence of the [wife] in the proceedings and therefore erred at law (Commonwealth v Verwayen (1991) 170 CLR 394).
3.The learned Judge having found that the [wife] had some capacity to work and therefore earn an income and having found that the [wife] had some qualifications to do so erred in fact and therefore in law by making a finding that there was a need of the [wife] for spousal maintenance.
4.The learned Judge, erred at fact and therefore at law in incorrectly finding the need of the [wife] to receive spousal maintenance which she found at paragraph 17 of the Reasons at $383.00 per week and the capacity of the [husband] to pay spousal maintenance as $500.00 per week and erred in fact and in law where:
a.The income and expenditure of the [husband] was not challenged by the [wife] in either her sworn material nor by her solicitor in submission,
b.The expenditure of the [wife] was challenged in both the sworn material of the [husband] and in submissions,
c.The finding that the Order for spousal maintenance payable was $500.00 per week incorrectly applied the law in light of the findings that the learned Judge made about the Respondent’s need.
5.The learned Judge after making a finding that the [husband]s [sic] expenses would decrease after the sale of [Property A] still made an Order requiring payment of $500.00 per week commencing 5 December 2014 and erred in fact and therefore law in so far as:
a.Consent Orders made on 2 December 2014 saw the sale of the property,
b.The learned Judge had no evidence before her of when the property would sell,
c.The learned Judge therefore had no evidence before her of when the [husband] would be relieved of [sic] requirement to meet expenses for the property yet still made an Order based on the [husband]’s expenses decreasing by the amount of $200.00 per week after the sale of the property.
6.The learned Judge erred in fact and therefore at law in determining that the [husband]’s expenses for rent in the amount of $200.00 per week to [his partner] and gym membership and clothing expenses were either unnecessary or discretionary expenses in circumstances where:
a.There was no evidence to the contrary that the [husband] was not required to pay $200.00 board to [his partner],
b.The [wife] did not challenge the [husband]’s assertion in either sworn material and no submission was made that the expense was discretionary or not a necessary expense of the [husband],
c.There was no challenge otherwise by the [wife] that the expenses were either not necessary or discretionary expenses.
7.The learned Judge having found that $500.00 per week were either discretionary or expenses that were soon to end, did not deduct that amount from the total personal expenditure of the [husband] to determine what his weekly expenditure was and therefore erred in fact and consequently law by not making subsequent findings as to what the expenditure of the [husband] was and therefore erred in not making findings about what his capacity to pay any spousal maintenance Order was.
8.It was not open to the learned Judge to find as she did that the Husband would not make payment of his 2013/2014 taxation payable by May 2015 in the amount of $71,637.65 and that he would therefore have to apportion an amount of approximately $3,979.00 per week until May 2015 to pay the taxation due and owing in circumstances where:
a.There was no assertion or submission made by the [wife] that either the [husband] would not or should not make the payment,
b.The payment is a legitimate debt oweable [sic] to the Commonwealth which the learned Judge had evidence of its existence before her
And the learned Judge therefore erred in fact and therefore at law in relation to her findings concerned the [husband]’s capacity to make a payment of spousal maintenance.
On 17 December 2014 the husband filed an application in a case seeking a stay. On 26 February 2015, the primary judge heard and dismissed the application.
I heard this appeal as a single judge pursuant to a direction issued by the Chief Justice on 25 March 2015 under s 94AAA(3) of the Family Law Act 1975 (Cth) (“the Act”).
Leave to Appeal
Leave to appeal is required as it is an interim spousal maintenance order (see s 94AA(1) item 4, and reg 15A of the Family Law Regulations 1985 (Cth)).
Leave will usually be granted in circumstances where the appellant can demonstrate he has suffered a substantial injustice and/or it is demonstrated that the reasons and orders contain an error of principle (Rutherford & Rutherford (1991) FLC 92-255, Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170).
In Jess and Ors & Jess and Ors (2014) FLC 93-620 the Full Court discussed whether this test should continue to apply. Their Honours referred to recent decisions of the Federal Court of Australia, in particular Samsung Electronics Co Ltd v Apple Inc (2011) 217 FCR 238 and Samsung Electronics Co Limited v Apple Inc [2013] FCAFC 138, but did not conclusively decide that this court should apply the test referred to in those decisions. This appeal is not one from a decision which could be categorised as being orders in the nature of practice or procedure. It is a decision requiring the husband to pay periodically a sum of money to the wife until trial.
The husband relies upon Ground 4 of his Appeal as the basis for leave to appeal, as the “learned Judge incorrectly applied her findings as to need and capacity of the [wife] and [husband] to the Order she made for spousal maintenance.”
The husband was ordered to pay the wife the weekly sum of $500 for interim spousal maintenance. It is argued the primary judge found the wife had “some need”, with weekly expenses of $383, and the capacity of the husband to pay was $500 per week. In circumstances where the husband’s income and expenditure was not challenged and the wife’s expenditure was challenged, it is argued that the order for spousal maintenance in the sum of $500 should not have been made and that the primary judge incorrectly applied the law.
In this matter, as will be explained later at greater length, there has been an error of principle. Apart from the confusion as to which section of the Act governed the order which was made, the primary judge failed to make the necessary finding as to whether the wife was unable to support herself adequately and the extent to which she was in need. The consequence is that the correctness of the decision must be doubted such that to refuse leave would be a substantial injustice to the husband.
Background and Reasons of the Primary Judge
The husband was born in 1978 and is 37 years of age. The wife was born in 1985 and is 29 years of age. The parties’ relationship commenced in approximately 2006 and ended in 2013.
There are two children of the relationship, aged six and five respectively. The children live with the wife in the maternal grandmother’s home. The children spend time with the husband during weekends.
The husband opposed the application of the wife for urgent spousal maintenance and opposed paying any spousal maintenance.
It is not clear if the primary judge meant to consider the matter by reference to s 77 of the Act, as would be required by applications for urgent spousal maintenance. It is more likely that the primary judge dealt with the application as one for “interim” spousal maintenance, which is of course decided according to different criteria.
In the reasons, the primary judge set out the relevant law in relation to decision about spousal maintenance:
15.Plainly there are two distinct findings I need to make for an application for spousal maintenance. One is that the applicant has the need for spousal maintenance, and the factors relevant in section 75(2) of the Family Law Act 1975 (“the Act”) would need to be discussed. The second is whether the respondent has the capacity to pay.
Wife’s “need”
In the Financial Statement filed 3 October 2014, the wife recorded that she had an average weekly income of $993, government benefits of $504 and child support of $490.
The primary judge found the wife had incorrectly completed her Financial Statement, in that she in fact has no income and is in receipt of government benefits and child support (at [16]). During the hearing, the error was conceded by the solicitor for the wife after the judge drew attention to the document.
As to this mistake, the primary judge concluded:
16.Turning firstly to the wife’s need. The wife is only in receipt of government benefits. Her financial statement is as much of a shemozzle as the husband’s is, quite frankly. She makes a mistake in her financial statement by indicating that she has $993 of total salary or wages before tax. All that money is, is in fact her parenting payment single, her family tax benefit and the child support she receives – or did receive at that time which has since been reduced for the children. And in error, that amount has been added in again at total salary or wages before tax at number 9, leading one to erroneously believe that she might have in fact an income of $993. She does not, and there is no evidence that she does. It is simply a mistake.
It was also recorded that the child support payments have since been reduced to $290 (at [17]). The wife estimated her personal expenditure at $590 per week, comprising of rental payments to the maternal grandmother, credit card repayments and child care fees. The wife did not tender evidence of a rental agreement with the maternal grandmother. At Part N of the Financial Statement, the wife estimates her average weekly expenses are $383 and the children at $500.
The primary judge did not precisely determine what the wife’s “need” is in dollar value, rather it was found (emphasis added):
22.All of those factors, it seems to me, make it plain that the wife has the need for some spousal maintenance. I cannot assess it at $1,500 per week because I do not know what she might be able to earn if she applied herself to getting a job and, in any event, she seems to have erroneously taken into account the support that is required of the children as opposed to the matters which are referrable to spousal maintenance as opposed to child maintenance. But I assess that she has some need.
The wife does not presently work, although she has a work history and some qualifications. The wife is a qualified fitness professional, has previously worked in retail, as an animal carer and also at times assisted the husband in his business (at [18]). The primary judge found the wife has some capacity to support herself, noting that the children live predominantly with her and she has primary parenting responsibilities (at [19]-[20]).
Husband’s capacity to pay
The husband is a qualified financial professional and derives income from a business partnership. The husband lives with his new partner.
The husband contended he had no capacity to pay. He submitted a complex Financial Statement to the court. In his Financial Statement filed 28 November 2014, the husband recorded his weekly income as approximately $3,695. This income is derived from rental income from various properties and his business. He estimated his personal expenditure at $4,041, comprising of rental payments to his new partner, mortgage repayments and child maintenance payments. The husband also did not tender evidence of a rental agreement. He records his personal expenditure as approximately $370, and estimates approximately $227 expenditure for the children.
The husband had a not well explained interest in a business structure. He held three properties (including Property A held jointly with the wife) which are tenanted. There was a shortfall of $200 per week on Property A, on the market for sale at the time of the hearing, which the husband met (at [7]). At the time of this appeal, the sale of Property A had recently settled and the sale of another property was due to settle sometime this year.
As to the husband’s personal income, the primary judge analysed the various sources of income and noted with interest that despite significant net trust distributions from the business profit since 2011 (at [10]), the husband contends he has never taken a wage and will receive a somewhat smaller income from the business this financial year. The judge remarked:
11.In his financial statement he chooses to express his income quite differently. He sets out their rental income after agent’s fees for the three pieces of real property which are tenanted. He then sets out his income from the partnership … for which he estimates $1,200 per week and $850 a week, which in the notations at the end of his document, he expresses that there is now the fifty per cent (50%) shareholding of he and Mr [B]. He then says this:
Since about 1 July 2014 the business has been operated pursuant to the Partnership. Since that time, Mr [B] and I, (via our respective entities) agreed to each take drawings from the partnership of $1,200 per week, and $3,700 per month, ($E853 a week). This equates to approximately $E103,200 gross. I am unable to take any drawings above this without Mr [B’s] consent.
My estimated annual income for the 2014/2015 year based on our projections is $E121,000. If these are correct and there is net profit of the partnership over and above our current drawings, the excess will be distributed after the end of the current tax year.
The monthly amount of $3,700 is the estimated tax payable on our drawings, and is intended to be saved by me in anticipation of the income tax payable on my drawings for the financial year ending 30 June 2015.
The husband sold 50 per cent of his share of the partnership in the business to Mr B and received approximately $200,000 for his share. The husband had significant taxation liability, and applied this money directly to that debt. The primary judge found:
12.I add there, the husband has never saved for his tax in recent years. He has never been in a position to pay his tax. He has never, it seems, put money to one side to pay for his tax, and indeed accrued a tax debt of some $220,000 or thereabouts apparently, which is – he says – why he sold half of the share of the business to Mr [B] for $200,000, because he could then say to the tax office, “I can now pay you, can you get rid of some of these penalties and charges and interest”? And the tax office has agreed to that. So the notion that he might be saving money for his tax seems to be a new thing in [the husband]’s life. Laudable, no doubt, but perhaps handy that he seeks to do that right at the time that the wife asks for spousal maintenance.
The primary judge assessed the husband’s personal expenditure. He claimed $60 a week for clothing and shoes, and $40 a week for gym membership and golf club membership. The primary judge regarded these as discretionary expenses that “he could do without” (at [27]), and considered that once Property A was sold, the husband would have reduced mortgage repayments. The primary judge also rejected the need for the husband to pay rental money to his new partner. It was concluded:
28.There is no basis for the Court to consider that he is required to pay [his partner] board. That is simply something that he is choosing to do. And that amount, he says, is $200 a week. If I then take the $200 a week from the excess of the mortgage, the $200 a week which he purports to be paying to [his partner], and the matters of discretionary spend in his financial statement which amount to an extra $100, it seems to me - clothing, shoes and gym memberships and golf memberships, that is an extra $100 a week - that comes to $500 a week.
29.The husband chooses to organise his financial affairs in a particular way. It seems to me he has done that in a way which does not assist the Court with understanding what his reality is, and there is no basis for the court to understand that he will earn less this tax year than he has in previous tax years; however he and Mr [B] have chosen to work out their budget for the year is a matter for them. The budget does not make it so.
30.I am satisfied that there is $500 in spend of [the husband] which is either discretionary, or is wholly a matter for him, or which will soon end. In all of the circumstances, I assess he has the capacity in the order of $500 per week…
Appeal
It is convenient to deal with the grounds of appeal in the manner they are argued by the husband as contained in the written summary of argument prepared by counsel. At the outset, the husband raises an important issue about the nature of the order made. The application of the wife sought an order for urgent spousal maintenance.
The Act makes special provision for urgent spousal maintenance cases. Section 77 of the Act relevantly provides:
Where, in proceedings with respect to the maintenance of a party to a marriage, it appears to the court that the party is in immediate need of financial assistance, but it is not practicable in the circumstances to determine immediately what order, if any, should be made, the court may order the payment, pending the disposal of the proceedings, of such periodic sum or other sums as the court considers reasonable.
The difficulty appears to be that although the wife applied for “urgent” maintenance, the primary judge appears to deal with her application as “interim” maintenance.
This difficulty is amplified by how the parties conducted their cases. For example, upon review of the transcript, the solicitor for the wife at times refers to the application as “interim” (Transcript, 1 December 2014, p 2, l 13, again at p 4, l 12) and then also refers to her “immediate need” (p 16 & 17, l 46) and “urgent need” (p 7, l 16). Counsel for the husband did not raise the issue during the hearing as to whether the application was urgent or interim.
Different criteria apply in applications for urgent as opposed to interim maintenance. In a s 77 application, the primary judge is obligated to consider:
a)Whether there is an immediate need of financial assistance (Malcolm & Malcolm (1977) FLC 90-220);
b)Practicability of making an order in the circumstances, particularly where there is sufficient evidence to justify making an interim or final maintenance order (Malcolm & Malcolm); and
c)The period of the order, which should be for a relatively short duration (Chapman & Chapman (1979) FLC 90-671).
Urgent maintenance orders are often referred to as “stop-gap” orders (Page &Page (1987) FLC 91-806) which are provided to assist with an immediate need of the spouse until a hearing can be set down for spousal maintenance orders pursuant to ss 72 and 74 of the Act. Nygh J analysed the difference between urgent and interim maintenance orders in Ashton & Ashton (1982) FLC 91-285 (at pp 77,613–77,614):
An application for interim maintenance is basically different from an application for urgent maintenance. An application under s 77 is heard at a time when all the evidence is not yet to hand. It may have to be made ex parte or may have to be made on such evidence as the husband is able to supply in the short period before the matter is set down for hearing. An application for interim maintenance is a creature whose exact nature has not been adequately defined but, as I understand it, differs only from an application for permanent maintenance in that the order which is sought is an order until further order. …
…
On an application for interim maintenance, the normal procedures relating to applications for maintenance under s 74 must be observed and an application for maintenance can only be heard after each party has had the opportunity to adduce evidence, that is to say, the normal procedure for the filing of affidavits by both parties and the filing of financial statements must be observed.
The primary judge determined the wife has “some need” of spousal maintenance, but fell short of assessing whether this need was “immediate” in the circumstances or quantifying her need. The order was not expressed for a limited time until there could be a hearing in relation to interim spousal maintenance.
The expression of the orders and the reasons for judgment lead to the conclusion that the approach taken by the judge was a consideration of whether interim spousal maintenance orders should be made.
Grounds 4, 7 and 8
It is argued the husband suffered a substantial injustice by the making of Order 1. It is broadly alleged that the primary judge erred in calculating spousal maintenance by reference to the husband’s capacity to pay, instead of first determining the wife’s actual need.
As noted above, the primary judge concluded the wife had “some need” (at [22]) and noted the amount the wife had calculated for her own support was $383 (at [17]). However, the primary judge did not come to a finding of a dollar amount to quantify the wife’s “need”.
Further, the primary judge did not make findings separating the wife’s need and the expenses she allocated for the children. It would appear these expenses were simply accepted, but not discussed in the reasons. The husband argues that the primary judge failed to properly regard the children’s expenses, in accordance with Stein & Stein (2000) FLC 93-004.
The primary judge found that neither party was obliged to pay board in their new accommodation (at [14]).
The husband challenged the wife’s need to pay board to the maternal grandmother, and also challenged her credit card repayments (Transcript, 1 December 2014, p 9). Further, the husband challenged the wife’s calculation of her own expenditure, disputing it amounted to $383 when it should have been $373. It should also be noted that at the hearing, the solicitor for the wife did not challenge any of the husband’s expenditure or income other than to assert that he had not made proper disclosure (Transcript, 1 December 2014, p 7).
Paragraphs [27] – [30] set out the primary judge’s findings on the husband’s capacity to pay maintenance. It was concluded that the expenses of clothing, shoes, gym and golf membership were discretionary in nature. Further, once Property A was sold the husband would no longer need to pay the excess of $200 per week in mortgage expenses. Calculating each of these expenses, the primary judge found the husband had a capacity of $500 per week.
In the absence of a finding by the primary judge of non-disclosure, the husband argues that the primary judge made no actual finding of his weekly income, which he estimates to be $3,695, a sum less than his expenses.
Applicable principles
Before an order for spousal maintenance can be made, a threshold finding under s 72 of the Act and a consideration of the ss 74 and 75(2) factors is necessary (Bevan & Bevan (1995) FLC 92-600). No such findings were made by the primary judge in this case.
As correctly submitted by counsel for the husband in his written submissions, the framework to be applied in determining spousal maintenance is set out in Kajewski & Kajewski (1978) FLC 90-471. Lindenmayer J set out the framework as follows (at 77,427):
In my opinion, the procedure established by the Act in relation to the maintenance of a party to a marriage is as follows:
(1)(a) Firstly, there is an enquiry under sec. 72 to determine whether the party seeking maintenance is unable to support herself or himself adequately for one or other of the specific reasons set out in that section (and for no other reason), namely the care and control of a child of the marriage, age, physical or mental incapacity for appropriate gainful employment or “any other adequate reason having regard to any relevant matter referred to in subsec. 75(2).” (The emphasis is mine.) In my opinion, not all of the matters referred to in sec. 75(2) are relevant as possible reasons for the applicant's inability to support herself or himself adequately, and in particular the fact that he or she is or may be entitled to a pension or other Social Security payments, the entitlement to receive which is dependent upon need, is not so relevant. To hold otherwise is to make nonsense of sec. 72, and to lead to this logical absurdity, namely that the applicant's entitlement to receive the pension, which is itself dependent upon proof or at least statutory assumption of need, is to be used to show that he or she has no need. Logically (although perhaps not legally) the converse should apply, and proof of the receipt or entitlement to receive such a pension should be regarded as some evidence of need.
(b) If the answer to this first enquiry is “no”, then the application must fail and no further enquiry is necessary.
(2)(a) Next, if the answer to the first enquiry is “yes”, there is then an enquiry as to the means and reasonable needs of the other party, and the extent of his or her ability to contribute towards the support of the applicant.
(b) If this enquiry reveals that the other party has no such ability, then again the application must fail and no further enquiry is necessary.
(3) Finally, if the second enquiry establishes that the other party has an ability to contribute towards the maintenance of the applicant, then there is a further enquiry as to the extent to which it is reasonable that he or she should do so, and it is only at this stage that any entitlement of the applicant to receive a pension of the type which I have mentioned becomes relevant. No doubt if the other party is comfortably able to contribute a sum sufficient to ensure the adequate support of the applicant, any question of the applicant's entitlement to such a pension should be ignored. If there is likely to be involved some hardship to the other party in contributing to that extent to the maintenance of the applicant, then the applicant's entitlement to receive such a pension may be taken into account to the extent that it is necessary to do so to avoid such hardship. In my opinion, however, such entitlement should not be taken into account to such an extent as to reduce the liability of the other party below what he or she can reasonably afford, and thus to cast an unnecessary burden upon the public purse.
In failing to quantify the wife’s “needs” and ignoring the legal obligations of the husband to meet mortgage repayments and a shortfall between income and expenditure in determining his capacity to pay, it is clear the primary judge erred in finding the husband had the capacity to pay the wife $500 per week.
Grounds 1 and 2
The husband complains about the wife’s lack of disclosure. Notwithstanding there appears to be poor disclosure on account of both parties, it is also argued he is entitled to rely upon the original Financial Statement filed 3 October 2014 of the wife, which contained the obvious income error.
Counsel for the husband in the interim hearing challenged the alleged mistake in the wife’s Financial Statement:
MR BUNNING: Thank you, your Honour. Your Honour, my client is entitled to come to court today and rely upon the financial statement that has been filed by the wife. This is the document your Honour usually looks to on both of the parties’ behalves when you determine this application. Now, this - - -
HER HONOUR: Certainly at face value, on the second page, it looks as though she has excess of income over expenditure and has no need for spousal maintenance.
MR BUNNING: Correct, your Honour. And my submission is that my client, especially in the absence of disclosure, which doesn’t seem to be in dispute because there’s a consent order about it, is entitled to rely upon that amount. Now, I don't know what it is. I don't know how the income is derived. I don't know if it’s income. But it’s a sworn document. This is the wife’s application for spousal maintenance. And for that and other reasons which I will now go into, your Honour, my client says that this is an ambit claim for spousal maintenance because the amount that is sought by the wife, even on the submissions made by her solicitor, don't equate to the amount that the wife seeks in the application.
(Transcript, 1 December 2014, p 8, l 23 – 34)
It is argued that the appropriate course, if the primary judge considered there to be a mistake, would have been to adjourn the proceedings pending the wife providing further disclosure, or allowing the solicitor for the wife to call his client as a witness and correct the error. However, counsel for the husband did not seek an adjournment during the hearing and agreed to the hearing to be without cross-examination.
The husband relies upon the well-known principles of estoppel, found in Commonwealth v Verwayen (1991) 170 CLR 394, as the basis he is entitled to rely upon the Financial Statement of the wife as filed.
The Financial Statements of both parties were not properly set out. It is obvious there were serious errors in the wife’s Financial Statement which were not properly amended during the hearing. However, the result is a consequence of how both parties chose to conduct their case. No witnesses were cross-examined, no adjournment was requested and the primary judge did her best to understand the financial situation of both parties under great time pressure during the hearing. There is no merit in this ground of appeal.
Ground 3
In this ground of appeal, the husband challenges the primary judge’s findings as to the wife’s capacity work. The primary judge found:
18.She has previously worked. The children are aged six and four – they live with her. The four year old requires, one would have thought, some time being spent with him. She no doubt has capacity to do some work and to receive some income, which she is not presently attending to. Of course, it is, one would have thought, obviously her responsibility to take appropriate steps to try and obtain work. The husband sets out his understanding of the kinds of skills that she has previously had. She has worked in retail. She is a qualified [fitness professional]. She has historically worked as an [animal carer], and she has at times assisted the husband in his business doing administrative tasks.
It is argued that the primary judge failed to make an appropriate order pursuant to s 77, and otherwise should have set the matter down for interim hearing for spousal maintenance. If the judge considered the matter pursuant to the provisions of s 77 of the Act, this submission would be correct. However, that does not appear to have been the basis of the order. It is correct that the primary judge should have made some findings as to the capacity of the wife to contribute to her own support. This task would have been difficult for the primary judge in the absence of cross-examination.
As I have already found some merit in this appeal, it is not necessary to consider this ground of appeal further. There is no current evidence before this Court of the wife’s capacity to work, and this is a matter for a trial judge to determine in a rehearing.
Ground 5
The husband submits that the basis for this ground of appeal is that the primary judge erred, as she had no evidence before her of when Property A would sell, relieving the husband of $200 per week.
In his Financial Statement, the husband included the shortfall in mortgage repayments of $200 per week. The primary judge concluded that once Property A is sold, the mortgage would be discharged and the cost of the shortfall of $200 would no longer be required.
In his written submissions, the husband argues the listing for the sale of that property had not taken place. It was therefore unclear how much longer he would bear the responsibility of paying that excess. Further, as the primary judge set the spousal maintenance as commencing on 5 December 2014, it was reasonable to conclude he would still be paying the mortgage during the time of the maintenance liability.
There is merit in this ground. As found under Grounds 4, 7 and 8 above, the primary judge was not entitled to assess the husband’s capacity to pay ignoring a legal obligation. It was not suggested to the husband that arrangements could be made to avoid this payment.
CONCLUSION
In conclusion, there appears to have been real confusion as to whether this was an urgent hearing or an interim spousal maintenance hearing. Although the presentation of both cases by the lawyers can easily be criticised, there is some procedural unfairness to the husband in coming to court to meet an urgent case which somehow was converted into an interim hearing.
The other difficulty is the judge assessing the husband’s capacity as $500 per week – wrongly – and then transposing that figure into the wife’s need for maintenance. The judge failed to find precisely the wife’s need before considering the husband’s capacity. If the matter was on an urgent basis the vague findings in relation to the wife’s need would have met the requirements of s 77 of the Act, but that is not the order made by the judge.
These factors lead to the inevitable conclusion that leave should be granted and the appeal allowed. In the absence of current information in relation to the parties’ circumstances, it is impossible re-exercise the discretion. Regrettably the matter will need to be reheard. Although the orders must be set aside, I indicated to the parties that this does not oblige the wife to repay the husband moneys received from the husband.
costs
At the conclusion of the hearing today, I asked the parties for submissions on costs.
In his written submissions, the husband seeks the wife pay his costs of the appeal on an indemnity basis.
There is a clear error of law in relation to the approach taken to considering the application. In this instance, it is appropriate to make no order for costs, noting both the wife and the husband’s limited financial circumstances to meet such order.
As there is an error of law in this case, in these circumstances, it is appropriate to order that each party be granted a costs certificate pursuant to the Federal Proceedings (Costs) Act 1981 (Cth) (“the Costs Act”).
The husband should be granted a costs certificate pursuant to s 9 of the Costs Act.
The wife should also be granted a costs certificate, pursuant to s 6 of the Costs Act.
I certify that the preceding seventy (70) paragraphs are a true copy of the reasons for judgment of the Honourable Justice May delivered on 1 July 2015.
Associate:
Date: 1 July 2015
7
4
0